National carrier defied improved its financial performance by reducing operating losses from Sh6.8 billion to Sh5.6 billion despite weak shilling
Kenya Airways reported significant improvement in its revenue collection for the 2021/22 financial year, signifying a positive outlook for the airline which has struggled for years to turn around its fortunes.
The airline’s chief executive officer, Allan Kilavuka, in a meeting with MPs in Parliament, said that KQ recorded a 66 percent improvement in revenue, compared to what it collected in the 2020/21 financial year.
Speaking during a meeting with the National Assembly’s Public Debt and Privatisation Committee, Kilavuka said that the improvement was achieved despite the fact that fuel prices increased during this period due to the Russia-Ukraine crisis and forex volatility.
“This improvement in revenue, however, was affected by the significant deterioration of the Kenya Shilling against the US Dollar, since a large proportion of our borrowing is denominated in US Dollars,” Mr Kilavuka said.
The CEO further noted that even with these challenges, Kenya Airways managed to improve its financial performance by reducing operating losses from Sh6.8 billion to Sh5.6 billion. He also argued that the Airline had also fully paid for two aircrafts out of its fleet of 36.
In addition, Mr Kilavuka briefed the Committee on Project Kifaru – a three-year turnaround strategy for the Airline which was started in February 2022.
This project is aimed at addressing debt, high cost of fleet and other structural cost issues on a sustainable basis, that were not addressed by previous restructuring plans.
The move, according to the CEO, is aimed at helping bring back the national carrier to profitability.
The Privatization committee led by the Vice-Chairperson Dr Makali Mulu held a meeting with Kilavuka, to discuss the financial status of the airline.
Of great concern to the Committee was the airline’s plan to get out of debt and become competitive. This follows a decision by the National Treasury to end bailouts to the airline this year to pave the way for restructuring.
Treasury Principal secretary Chris Kiptoo in a previous session with MPs, said that the exchequer had resolved not to allocate any additional funds to the airline in the 2023/24 financial year.
The PS, while making presentations to the National Assembly’s Finance and Planning Committee, said that the Treasury had instead prepared several options to rescue the struggling national carrier.
“We have cut funding for KQ, which received a substantial bailout in the last and the current budgets,” Kiptoo said.
“We have prepared a Cabinet memorandum on the turnaround strategy of Kenya Airways that is currently before the subcommittee of the Cabinet. The memorandum will be tabled in the full Cabinet,” he added.
KQ’s net loss more than doubled to hit a record Sh38.26 billion in the financial year ended December due to what the company said was an increase in financing costs after the government took over servicing one of the dollar-denominated loans.
The net loss grew 1.4 times from Sh15.87 billion posted in 2021, taking the national carrier’s accumulated loss to Sh172.68 billion.
In March, the board announced that the airline is on course to hit break-even points this year and profitability by 2024 —something it has not done since 2012 when it closed with net earnings at Sh1.66 billion.
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